As geopolitical tensions escalate from military conflict between the United States and Iran, volatility in the Korean stock market has widened, with growing investor concerns about potential further declines. Securities firms advise a selective investment strategy focused on corporate fundamentals rather than panic selling.
"Focus on Fundamentals, Not Panic Selling"
According to the securities industry on the 9th, major brokerages including KB Securities, Kiwoom Securities, and Daol Investment & Securities identified "corporate fundamentals" as the key variable determining long-term performance during market plunges. Fundamentals refer to a company's intrinsic competitiveness, including revenue, profits, financial stability, and growth potential.
Analysts suggest that periods of heightened market fear due to external factors like war may actually create opportunities to purchase fundamentally strong stocks at lower prices.
"What matters in a sharp decline is fundamentals. In recent short-term plunges like this, we should look for buying opportunities," said Lee Eun-taek, researcher at KB Securities. "Panic selling typically occurs not at market peaks but at price bottoms. Cases where panic selling signaled the start of a decline are rare, and 'W-shaped rebounds' have been more common."
Securities firms also suggest the current market situation is more likely a temporary correction than a prolonged downturn. They advise using the decline as a strategic opportunity for value buying.
Sectors with stable fundamentals that could benefit from won weakness—including energy, automobiles, and leisure—are considered particularly promising.
"While inflation concerns are rising as commodity prices increase due to Middle East conflict, U.S. energy prices remain relatively stable, raising expectations for U.S. energy exports," explained Choi Yong-hyun, researcher at KB Securities.
Auto and Leisure Stocks See Sharp Declines—Candidates for Value Buying
Auto-related stocks, representative cyclical plays, have also fallen sharply amid heightened volatility. Hyundai Motor closed at 507,000 won on the 9th, down 46,000 won (8.32%) from the previous day. Kia also dropped 13,600 won (8.14%) to close at 153,400 won.
Experts believe these declines could enhance valuation appeal. The auto sector has solid earnings, and shareholder return policies including dividends and share buybacks provide relatively strong defense even in volatile markets.
"There is no need to assume immediate bottlenecks in new car sales from Iran's control of the Strait of Hormuz," said Yoo Ji-woong, researcher at Daol Investment & Securities. "No structural economic slowdown is unfolding, and Hyundai Motor Group withdrew from the Iranian market more than five years ago. We maintain our annual sales volume estimates for Hyundai and Kia."
The leisure sector is also attracting investment interest following recent corrections. Shares of the three major casino operators fell an average of approximately 16% over the past week due to macro uncertainty and foreign capital outflows.
"Leisure stocks continue to benefit from a favorable operating environment driven by won weakness and reflected gains from Japan-Korea route demand. From the second quarter onward, as the off-season passes, sharp earnings growth is expected to resume," said Lim Su-jin, researcher at Kiwoom Securities. "Current share prices have fallen excessively due to macro issues, presenting an opportunity to increase positions."
Cho Byung-hyun, researcher at Daol Investment & Securities, added: "Fundamental concerns in the current market are not significant. If geopolitical risk concerns ease, conditions are in place for the market to rebound faster than the historical average pace following sharp declines."
